Digital Asset Investment Products See Record Inflows, Bitcoin Dominates
Last week, digital asset investment products experienced record-breaking inflows of $2.45 billion, resulting in a total assets under management (AuM) of $67 billion. Bitcoin dominated the inflows, accounting for over 99% of the total. Other major beneficiaries included Avalanche, Chainlink, and Polygon. However, investors in blockchain equity ETFs registered outflows of $167 million, indicating concerns over high valuations in the sector.
US Leads Inflows with Surging Interest in Spot-based ETFs
The United States accounted for 99% of the total inflows at $2.4 billion. This surge represents a major acceleration of net inflows and signals increasing interest in spot-based ETFs among various providers. Additionally, outflows from incumbent players have significantly decreased.
Ethereum and Solana Also Experience Inflows and Outflows
Aside from Bitcoin, Ethereum also benefited from the inflows, receiving $21 million. On the other hand, recent downtime affected Solana, resulting in outflows of $1.6 million.
Optimism for Continued Growth in Digital Asset Funds
Industry observers remain optimistic about the future growth of digital asset funds. As the asset class matures and regulatory guidance emerges, mainstream adoption is expected to accelerate. Brian Jones, CoinDesk Markets analyst, believes that if current trends persist, the assets under management milestone of $100 billion could be reached in 2022.
Moderate Activity Outside the US
Outside the US, Germany and Switzerland saw modest inflows of $13 million and $1 million respectively. However, Sweden recorded outflows of $26 million.
Prepare for Volatility in the Digital Asset Sector
While digital asset funds continue to climb to new highs driven by institutional demand, investors should be prepared for potential pullbacks along the way due to the volatile nature of the sector.
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